<p>A friend of mine has a cousin who is a dental hygenist and lives in the midwest.</p>
<p>The cousin called today and said she can no longer make it. With the cost of food and energy, she spends more than she makes. She makes $42,000 a year. </p>
<p>If people who make $42,000 a year can’t make it (she has a kid), it is time to lower the cost of food and energy.</p>
<p>Three things will do it.</p>
<p>Raise the margin requirements on grains and energy products. For example, you can buy oil futures on the Nymex, where oil is traded. To control 1,000 barrels of oil (which is worth around $110,000) , you have to put up around $8,000. $8,000 to control $110,000. Raise that number to around $24,000 and the price of oil will plummet. Do the same with the grains.</p>
<p>After you do these two things, stop the ethanol craze. As the cover article in Time magazine explained, ethanol made form corn products is not energy efficient, but it does raise the price of corn.</p>
<p>Do these three things and the cost of living for Americans, and others around the world, will decrease.</p>
<p>Before somebody complains about free markets, ethanol is not a free market, and margin rates are allowed to be adjusted and there is nothing magical about the margin rates that exist now.</p>
Artificial price ceilings will only lead to shortages.</p>
<p>It’s a bubble…all the investment money that left mortgage securities and the stock market is looking for a higher return…so it has inflated commodities (compounded with the lower dollar). Unfortunately the poor suffer the most. The bubble will be unwound eventually but imposing cost controls will only lead to unintended consequences.</p>
<p>dstark, your solution may impose a barrier to entry for investors trading commodities. However, it will raise transaction costs for the commodity that will be passed onto the consumer.</p>
<p>No, that won’t happen. The poor always suffer, but they will suffer less with lower oil and food prices.</p>
<p>“dstark, your solution may impose a barrier to entry for investors trading commodities. However, it will raise transaction costs for the commodity that will be passed onto the consumer.”</p>
<p>Transaction costs? Who cares about transaction costs? They are pretty low, anyway. Transaction costs will not change much unless you are talking about the cost of carrying the future. Yes, that will go up sharply, forcing speculators to sell the futures, and driving the price of the goods lower. That is the idea.</p>
<p>The cost of the commodities will plummet. That will effect Americans in a very positive way.</p>
<p>“The bubble will be unwound eventually but imposing cost controls will only lead to unintended consequences.”</p>
<p>Alternative energy will suffer. So after oil prices plummet, we will need to do what we always do, subsidize the producers of alternative energy. That’s better then sending the money overseas.</p>
<p>Well, they might be relatively low, but compounded over the vast amounts of transactions and volumes that take place in a commodities market, these costs will add up quickly. Companies that trade for physical product will want to recoup these costs by passing them on to consumers.</p>
Ok, get rid of the 10 percent ethanol portion of a gallon of gasoline. What will you replace it with? More gasoline? That will just raise the price of gasoline. How about the greenhouse gas increase? One of the reasons given for adding 10 percent ethanol was that it would reduce the greenhouse gases? Are you sure you have thought this through?</p>
<p>Let the consumer and the markets make the buying/selling decisions. The rise in pricing will do very rapidly what W tried to do in rhetoric, tax breaks, and subsidies. There will other consequences that nobody want to worry about until later.</p>
If you look at the fuel dispenser when you pump your gasoline, you will likely see a sign saying This fuel contains up to 10% Ethanol. If you remove the ethanol from gasoline, you will have to add something else. </p>
<p>^ It does…ethanol is an additive that replaced methyl tert-butyl ether (MTBE) -mandated by the government as an oxygenate for the Clean Air Act of 1990.</p>
<p>I’m a bitter American. I guess it’s time for me to get my gun after I go to my church first and complain about those gay immigrants. The problem is with those rascally future energy speculators that artificially drives up the cost of a barrel of oil. Dag nab it!</p>
<p>"A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil’s reserves and make the offshore bloc the world’s third-largest known oil reserve, a top energy official said Monday. </p>
<p>National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed but his comments sent shares of state-run oil company Petrobras soaring in New York and Sao Paulo.</p>
<p>Petrobras said in a statement that more studies are needed to determine the potential of what could be the planet’s largest oil find in decades. Analysts said the magnitude of the find, if confirmed, could have far-reaching global energy ramifications"</p>
<p>Now, dstark…let market forces push prices back into alignment…market manipulation games are only going to delay the inevitable.</p>
<p>Remember late 1970s…oil prices were extremely high. In the late '80s prices plummeted and oil companies suffered for almost two decades while the world basked in cheap energy. Oil is a cyclical business…this cycle will end.</p>
<p>“Now, dstark…let market forces push prices back into alignment…market manipulation games are only going to delay the inevitable.”</p>
<p>It’s not like I have any control. :)</p>
<p>I would accelerate the inevitable.</p>
<p>I am in favor of popping bubbles before they get too large. We would be in better shape if margin requirements were raised for stocks in the year 1999. Our economy would be in better shape if mortgage lending standards were tightened in 2004. Our economy will be a lot better off if we raise margin requirements for a whole slew of commodities now.</p>
<p>I have never heard so many stories of middle class people having so many economic problems. The middle class is really taking it on the chin.</p>